China Manufacturing Progress

• Official PMI rose to 49.8 in September, up from 49.1 in August.
• Still below the 50 thresholds, indicating sixth straight month of contraction.
• The reading beat expectations (49.6) and marks the strongest PMI since March.

Key Drivers & Headwinds:

• Beijing’s push to curb industrial overcapacity and stimulate demand is showing partial traction.
• Domestic demand remains weak, compounded by higher U.S. tariffs and global trade disruptions.
• High-tech and equipment manufacturing sectors led the modest recovery.

Private Sector Divergence:

• Caixin PMI fell to 49.3 from 50.4 in August its sharpest drop in 14 months.
• Caixin index, more reflective of private and export-oriented firms, signals deeper stress.

Macro Implications:

• Fierce price competition among manufacturers has led to short-term stockpiling, not sustained demand.
• The data underscores China’s struggle to revive growth momentum amid property woes and rising unemployment.

(Source CNBC)

—Agencies